Storm wins in an upset.
Hogan's full of himself. He always has been. Whether he was the top dog Real American at the top of the WWF, the leader of the nWo, or Emperor of TNA (or whatever his title is), he has never stopped being completely and totally full of himself. And that's not entirely unwarranted, because look at all those accomplishments. He's been a big deal for a long time. He's still the #1 go to example of what a professional wrestler is in whatever context you're talking about, from the most casual to most hardcore scene. But the undeniable fact remains - he's full of himself.
Secondly, he's from a completely different generation. It's not that the wrestlers he worked with in the WWF, WCW, later WWE, and even New Japan and an indy here and there weren't very good, it's just that they're completely different. Hogan is, by and large, used to wrestling guys of a certain profile. They're either big - Andre, King Kong Bundy, so forth - or they're massively ripped - the Savages and Lugers of his world. All of whom he's defeated handily before. There's a third class of wrestles who profile like Storm, and he's had very mixed results against them.
Consider Sting, who historically outdoes Hogan in their meetings. He's of approximately the same height and weight as Storm, and certainly, with years of experience together in TNA, would have rubbed of on him in a personal manner, in addition to his general influence on the development of the American indy style that Storm is a master of. Or Ric Flair - also of approximate height and body weight to Storm, who's defeated Hogan more times than any other wrestler in history. Who was also a personal mentor to James Storm in Fourtune, and who holds the same qualifications as Sting in terms of general influence on Storm's overall style. You might bring up the example of Shawn Michaels, who holds similar qualifications as Flair and Sting, and who lost to Hogan one on one, but only once. The greater track record suggests that the guys with the best odds of beating Hogan are guys like Sting and Flair - guys like James Storm.
So consider: Hogan enters a match against a guy with the traditional profile of the people that beat him most often, who works a style he's very unfamiliar with - because, even though Sting, Flair, and Michaels are influences on it, it's also loaded with post ECW, puro, and pure innovation that lead to its overall makeup - and whom he wouldn't take seriously at all, owing to that he barely knows his name. He wouldn't gameplan for Storm. It's the first round of the tournament, he's the number one seed, and he's freakin' Hulk Hogan. He'd be out partying the night before. And Storm would take him to task, get the better of him, and beat him.
Don't be fooled by the big name versus the relative no name, 1 seed versus bottom seed. This is classic upset material staring you in the face. Storm would win this match.